For portfolio loans, if the loan closes within lets say 45 to 60 days, is there any real value to re-pulling a credit report on a customer? I know that inquiries will show immediately, but its not likely that the total debt will change much or many late pays would show up because of when these are reported. I have ATR as of consummation in mind when asking this question.

I'd appreciate it if others would share their process in this area.

Checking for new debt may be prudent. FWIW, we do not re-pull credit prior to closing.

Will you issue a denial 2-3 days before closing? Put everyone out the costs of the process and cost the borrower points on their credit score because you pulled credit twice (or more)?

How would you go about telling someone, hey, I saw where you applied for a furniture store (or home improvement store) credit card or line of credit -- and now you can't buy this house?

We have a loan that took six months to close because of a shared well on the property. The ATR was reviewed at the beginning of the process and was never looked at again. At or before consummation is not specifically defined in the regulation and so we are trying to decide if it would be wise to set a limit. A lot can change in six months and these changes, if debt related, will have enough time to hit the credit report. Perhaps 60 or 90 days would not make much of a difference.

We don't collect fees until closing so the customer wouldn't be out money (we would), we would use a "soft pull" so it would not affect the customer's score. However, as you said, we would have to consider if the loan would then have to be denied based on the newest information. But really this is the same risk if we find out before closing that the customer has lost or changed jobs which has affected their income. We would not knowingly put them in a loan they no longer could afford.

We are trying to think through all the angles and was wondering if anyone had put something in place to mitigate risk in this area.

We are primarily a portfolio lender. We used to pull a GAP report (covering app date to closing) but now subscribe to a monitoring service from Equifax. We are alerted to credit inquiries and new accounts that are opened. This helps us know of new debt without having to pull a formal report.

It is a best practice to do some form of added due diligence prior to closing. Your post closing Quality Control process should be pulling new credit reports on their sample loans to validate underwriting.

After 6 months, we would consider the credit stale (at least in my world) and we pull again. Credit expires after 120 days.

How would you go about telling someone, hey, I saw where you applied for a furniture store (or home improvement store) credit card or line of credit -- and now you can't buy this house?

That's the whole purpose of the following statement in your approval/qualification letter.

There can be no adverse changes in credit history, employment, income, assets, ability to repay or deposit accounts prior to closing the loan.

From 1026.43(c)

(vi) The consumer's current debt obligations, alimony, and child support;

A 60, 90, 120, 180, etc. day old credit repport is not going to give you the consumer's current debt obligation.